The year was 1993. I registered my first corporate entity, an S corporation for a new Chicago-based business I’d decided to launch.
Several months later I sat in stunned amazement after receiving a voluminous three-ring binder with all of my documents.
“Yipes”, I thought. “What have I gotten myself into?”
Keep in mind that these were the pre-Internet days. There was no web, no cloud service to house the documents on, no email, nada. Yet somehow, I had to figure out how to keep all of these documents straight.
My solution? Tuck the binder away for safekeeping and never look at it again.
A Flurry of New Documents
I’ve now established corporate entities in states like Indiana, Nevada, California, New Mexico, and Colorado over the years. And thankfully, with the growing adoption of the Internet, the process of setting up a business has become exponentially easier.
Take a look online and you’ll find an ocean of corporate entity services for setting up LLCs and the like. They’ll file the appropriate Secretary of State documents, set up a tax ID number, and secure a resident agent for you if you reside out-of-state.
The good news is that many of these companies are now able to send you an electronic version of your documents. Unfortunately, if you’re anything like me, these documents are rarely given any attention. In fact, often they end up getting parked in an e-repository gathering cosmic dust, vulnerable to security hacks.
The filed formation documents, however, hold great importance in terms of equity holder rights as well as the management and operation of your entity. For corporations, this is embodied in what is known as the “articles of incorporation” and the “bylaws.” Limited liability companies (LLCs) on the other hand utilize certificates of formation and operating agreements.
Limited Liability Companies, in particular, have grown in popularity over the years in part due to less onerous document requirements. On the other hand, if you form S Corporations, C Corporations, and certainly Limited Liability Partnerships, you’ll likely find your paperwork to be much more voluminous.
In the end, every business needs a written agreement outlining the operational roadmap, protocol, and rules. These operational documents are your company’s governance model, akin to a written constitution or charter.
But wait, you’re not done.
Once your business is operational, you will find that it will spawn all sorts of other documents that can be challenging to keep organized. By way of example, Nevada and Wyoming corporations offer major benefits in terms of asset protection. So, documents tied to brokerage accounts, gold certificates, cars, homes, and other tangible assets placed under say an LLC must be properly accounted for and stored in a secure and safe environment.
The Blockchain of Business
equaSTART is a promising new company positioned to deliver a compelling solution to the morass of documents that business owners are required to manage. It combines the ability to easily and seamlessly form a new business entity with the ongoing support needed to ensure that documents are up-to-date, organized and easily accessible.
equaSTART’s key value proposition is the ability to foster the living core documents that are the brain of your business. equaSTART effectively facilitates the constellation of start-up documents and business agreement by employing the emerging technology known as Blockchain.
In his book, The Blockchain and the New Architecture of Trust, Kevin Werbach, Professor of Legal Studies at the Wharton School of Business defines blockchain as “a data storage system using linked sequential chunks of information. It is literally a chain of blocks designed to create an immutable ledger of transactions.”
In other words, blockchain as a digital ledger is exquisitely efficient in organizing records of business agreements and transactions. It offers privacy protocols that regulate how information can be accessed as well as a digital trail identifying who and when the information was accessed.
An additional element in the blockchain constellation, known as smart contracts, mitigates the need for intermediaries, boosts consistency and creates accountability in the workflow process. This helps boost the efficiency and effectiveness of a business.
New Frontiers of Business Asset Management
Back when I formed my business in 1993, the three-ring binder full of documents I received included stock certificates to issue shares to investors. Moreover, any assets held by my company were to be recorded on a paper document and filed away appropriately.
Today with blockchain’s emergence, tokenization is the next evolution for the future of business. Literally, anything of value can be tokenized by recording it on a blockchain with the digital tokens signifying value and ownership. Investor shares can be easily purchased and sold from your business via tokens, all easily transferable via the blockchain network.
All of this reflects the next wave of proprietary rights tied to the tokenization of assets whether they be commercial real estate, cars, even gold. equaSTART can offer direction on how to build a digital token framework for managing these assets in a secure and efficacious way.
Now with a living version of your organizational documents and tokenized assets, you’ll no longer be working with a static document that is sitting on a hard drive on some computer. That’s what sparked my interest in equaSTART and I hope you’ll invest the time to learn more about this exciting startup as well.
Michael Scott is a Las Vegas Blockchain Journalist and blogger for EquaSTART
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